Investment experts from abrdn were among senior industry figures to address a global summit on transitioning to a net-zero energy economy held in partnership with the United Nations in December.

The Global ESG Summit, hosted by ESG Clarity in partnership with the UN Capital Development Fund (UNCDF), comprised three programs streamed live for audiences in Asia, the UK/Europe and the US. The event brought together environmental, social and governance (ESG) experts, fund managers, asset owners and data specialists. Xavier Michon, Deputy Executive Secretary of the UNCDF, delivered keynote speeches to launch proceedings in each region.

The event in Asia opened with a debate on key takeaways from the 26th United Nations Climate Change Conference in Glasgow (COP26) in November 2021. Participating in this panel was Danielle Welsh-Rose, Head of abrdn’s Asia-Pacific Sustainability Institute and ESG Investment Director, Asia Pacific.

In the panel (excepts below), she explains why developed markets must speed up decarbonization plans, outlines abrdn’s own commitments to net zero, highlights the need for collaboration between China and the US and discusses the investment industry’s role in finding solutions to climate change.

What were your key takeaways from COP26?

COP26 sent out a strong signal about positive changes taking place across public and private sectors, including in Asia Pacific. It’s clear that the transition to zero carbon energy will shape the next decade and beyond. However, many targets set out by developed economies still lack credibility. Unless you think emerging markets can decarbonize completely by 2050, rich nations have to decarbonize faster to keep to the 1.5 degrees Celsius target [for global warming agreed at COP21 in Paris in 2015]. If we are to ensure a just transition to net zero, richer countries have to transition faster to compensate for the justifiably slower pace of poorer countries. There was noise at COP26 about India being among countries pushing to dilute commitments from phasing coal out to phasing it down. Like many developing countries, India has to combine sustainability goals with the need to reduce poverty and raise living standards. It can’t do that unless zero-carbon technologies become available in all sectors to speed up the decarbonization plans of advanced economies.

How have announcements at COP26 impacted abrdn as an asset manager?

From a corporate perspective, abrdn is already carbon neutral and we have accelerated plans to target net zero in our own operations by 2040, down from 2050. From an investment perspective, abrdn is a member of the Net Zero Asset Managers Initiative, whose signatories target net-zero directed investing. We have committed to reduce the carbon intensity of our assets 50% by 2030 versus a 2019 baseline. We've made progress, but we recognize the fact that we need to move faster.

China did not attend COP26, but did talk about net-zero commitments and boosting climate cooperation with the US. Any comment?

The prospect of China and the US working together is promising and hopefully will accelerate climate action. Decarbonization is a strategic priority for China, which has pledged to achieve peak carbon by 2030 and carbon neutrality by 2060. China is both the largest single emitter of CO2 globally and the world’s top investor in renewable energy. It has set ambitious decarbonization targets. But the challenges of meeting its commitments are clear and whether it will achieve them is an open question. We heard discussions around carbon trading at COP26. China has implemented an emissions trading scheme to price carbon, still a rarity among developing countries and even many richer ones. There are challenges around the scheme being narrow and the price of carbon being low. But it’s a promising sign.

What does the asset management industry need to do to play a part in this transition? Will it step up to meet these challenges?

I hope so. We saw strong willingness at COP26 for the private sector to play its part. But next steps to net zero will depend on moves by policymakers and clients to act on net-zero commitments. We'll have to keep observing how asset managers measure and implement targets in practice. The devil will be in the detail.

US-060122-163685-1